Still tough for manufacturing as export orders weaken - CBI (From Watford Observer)

Still tough for manufacturing as export orders weaken - CBI

10:10am Wednesday 24th June 2009

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Manufacturers experienced another challenging month as overseas demand for UK-made goods weakened again, according to the CBI’s latest monthly survey.

Of the 566 manufacturers taking part in the June Industrial Trends survey, six per cent said export order books were above normal, while 58 per cent described them as below normal. The resulting balance of -52 per cent is the lowest since October 1998 (-55 per cent), reversing the slight improvement that had been seen since March.

However, there has been a modest improvement in total order book levels, suggesting that domestic conditions are no longer quite as weak. The pace of decline in output has also slowed.

Ian McCafferty, the CBI’s Chief Economic Adviser, said: “Export orders are no better than they were a few months ago, reflecting the continued weakness of overseas demand for UK-made goods. As such, conditions for UK manufacturers remain challenging with volumes of total orders still at very weak levels.

“However, manufacturing firms do expect output to fall at a much slower pace compared to the beginning of the year, as the drastic action they have taken to reduce stocks appears to be paying off. Although the stock position somewhat improved on previous months, stock levels remain high relative to demand.”

While 10 per cent of firms reported total order books above normal, 61 per cent said they were below normal, giving a balance of -51 per cent. That is a slight improvement on the previous four months when the balance hovered between -56 per cent and -58 per cent.

Manufacturers expect output to drop at a much slower pace over the coming quarter compared with earlier in the year. Seventeen per cent of firms expect the volume of output to increase over the next quarter, while 34 per cent expect it to fall. That gave a balance of -17 per cent, which was unchanged on May’s figure, but a marked improvement on April’s balance of -32 per cent.

Firms surveyed are still planning to lower their domestic prices over the next three months (a balance of – six per cent), but at a much slower rate than expected only a month or two ago (balances of -13 per cent in May and -20 per cent in April).

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